Compensatory tax must be proportionately beneficial to payers: SC

New Delhi, Apr 13 (UNI) The Supreme Court today held that compensatory tax must be proportionately beneficial to the payers.

A five-judge constitutional bench headed by Mrs Justice Ruma Pal overruled the earlier law laid down by this court in Bhagatram's case which said that even if the tax is imposed in public interest, it can be classified as compensatory tax.

The court held that the concept of compensatory tax is in the nature of reimbursement and the payers of compensatory tax must be compensated in terms of quantifiable benefits and facilities provided by the state.

The ruling came on a bunch of petitions challenging the validity of the act enacted by Haryana.

The petitioner Jindal Stainless Limited had contended that the law laid down in Bhagatram's case was not correct and it desereves to be reconsidered.

Other judges on the bench were Justices B N Shrikrishna, S H Kapadia, Tarun Chatterjee and P P Naolekar.

The judgement was read out by Justice Kapadia.

The court said restrictions on freight rate can be imposed only if it is the interest of the nation or the people.

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